Pension chat

Albermarle

housebuyer143 said:

Band7 said:

Apologies for going somewhat off-topic but as payments to pensioners have been mentioned, I felt some corrections are necessary.

RG2015 said:

The basic state pension is £10,600 after last month’s inflation matching increase. If this was their only income I suggest that many pensioners would still be struggling.

The increase would likely be more than swallowed up by increases in energy and food costs. Many would still not be spending on more than the essentials.

£10,600 is the maximum of the new state pension. Only a minority of pensioners are on the new state pension, and of that minority, not everyone gets the maximum. The max old basic pension is now £8,122 a year. This is why some 15% of pensioners are living in poverty.

https://www.gov.uk/government/publications/benefit-and-pension-rates-2023-to-2024/benefit-and-pension-rates-2023-to-2024#state-pension

housebuyer143 said

One pensioner on their own yes, but £21,200 a year for two pensioners living together, free prescriptions, free bus pass, winter fuel allowance, probably rent and mortgage free, that's a lot of money to have a year. It's known that as you get older you spend less. I'm not against pensioners getting an increase as they have no ability to earn more, but the pension is very generous. 

I can only assume you are joking. £21,200 for 2 people is hardly very generous, by any measure. Not that every pensioner actually does get the max amount, see above. Being mortgage free also doesn't mean there are no house maintenance costs, and cost of living does vary depending on where you live. Different people have different opinions of how much is required for a comfortable life but I hope you are aiming for more than £21k (inflation adjusted) retirement income for your household.

sevenhills said:

One pensioner on their own will also get over £800 for their winter fuel allowance, not sure how much a couple would get, but those in a low income could qualify for around £1,000

The winter fuel allowance is not over £800.

Actually if I ended up with £21k adjusted for inflation when I retire I would be happy tbh. That's all me and my husband pay to live now a year and we service a £7k a year mortgage, plus have a child and run two cars and we live very comfortably.

If a couple can't live on almost £2k a month tax (if you have no rent or mortgage) free without living in poverty I do suggest that pensioners need to look at their spending. Lots will have private pension as well to top it up. 

Each to their own opinion but I look at my parents who both received the new state pension in full who live in South West and they tell me they can't believe how generous the pension is. The bills are not exactly cheap down there but they are definitely not in poverty. They might not be accumulating savings on that amount but I don't think they should be at this age.

There have been many many discussions on these forums about what people can  live off. Clearly there is a wide range of answers, but for two lowish spenders , then two state pensions can cover day to day spending. Then another £5Kpa ( from income or savings) can mean a holiday/ new boiler/ new carpets/ gifts to family etc . The extra just gives some more flexibility.

thefrank

After I have read that pensions in Uk are very generous I asked for my holidays so I can go on laughing

schiff

To get back to the main topic - my First Direct RS at 7.00% fixed matures in August. Of all the signs around I think what they do for the renewal will be revealing with regard to the way rates are expected to go. Till then it's guesswork.

housebuyer143

IanManc said:

I'm not a pensioner, but perhaps people who (wrongly) think that the UK state pension is "generous" are forgetting that the people who get full pensions have generously contributed their generous National Insurance contributions for at least 35 years of their working lives to pay for them.

Of which most will never have contributed anywhere near what they get back when you consider the use of the NHS and social care and everything else it's meant to cover 🤷‍♂️ 

I'm just saying that two people on £21k a year with no housing to pay for can't be considered to be in "poverty" in the UK. Many working families take home similar and they will likely have higher costs to pay such as children, housing and prescriptions etc. 

Band7

IanManc said:

I'm not a pensioner, but perhaps people who (wrongly) think that the UK state pension is "generous" are forgetting that the people who get full pensions have generously contributed their generous National Insurance contributions for at least 35 years of their working lives to pay for them.

I am afraid, it's another myth that people's NI contributions are generous.

Sure, if we are employed, we [and our employers] pay a tax called NI, which is used to part-fund the NHS and a range of benefits, of which state pension is the largest by far. The tax is a percentage of untaxed income, and millions of low paid people or people out of work for some reason don't pay anything for their NI years but still get them credited. Higher earners, as with income tax, contribute a larger amount of NI contributions over a lifetime, and therefore they might not consider state pension as good value for money than lower earners do (or should, at least). But this is how social security works - those who are better off are helping those who are worse off, and I believe we should be proud that we live in a society in which a social security concept exists, even if it isn't perfect. 

People are usually surprised just how small the accrued sum of their NI contributions are over a lifetime. You can check your totals in your personal tax account, or adding them up from your P60s if you kept them all.

You can also get yourself an annuity quote to see how much you would have had to accrue for a whole life, index linked, weekly payment, starting with £203/week.

Anyway, whilst this is all interesting stuff, it is way off topic.

Band7

housebuyer143 said: 

I'm just saying that two people on £21k a year with no housing to pay for can't be considered to be in "poverty" in the UK. Many working families take home similar and they will likely have higher costs to pay such as children, housing and prescriptions etc. 

It is certainly the case that many UK pensioners have a better standard of living than many working age people. Nobody has said that all UK pensioners are living in poverty, but some 15% of them do. That's because not every pensioner household does get £21k a year, or £10.6k when they are single. 

oz0707

Band7 said:

IanManc said:

I'm not a pensioner, but perhaps people who (wrongly) think that the UK state pension is "generous" are forgetting that the people who get full pensions have generously contributed their generous National Insurance contributions for at least 35 years of their working lives to pay for them.

I am afraid, it's another myth that people's NI contributions are generous.

Sure, if we are employed, we [and our employers] pay a tax called NI, which is used to part-fund the NHS and a range of benefits, of which state pension is the largest by far. The tax is a percentage of untaxed income, and millions of low paid people or people out of work for some reason don't pay anything for their NI years but still get them credited. Higher earners, as with income tax, contribute a larger amount of NI contributions over a lifetime, and therefore they might not consider state pension as good value for money than lower earners do (or should, at least). But this is how social security works - those who are better off are helping those who are worse off, and I believe we should be proud that we live in a society in which a social security concept exists, even if it isn't perfect. 

People are usually surprised just how small the accrued sum of their NI contributions are over a lifetime. You can check your totals in your personal tax account, or adding them up from your P60s if you kept them all.

You can also get yourself an annuity quote to see how much you would have had to accrue for a whole life, index linked, weekly payment, starting with £203/week.

Anyway, whilst this is all interesting stuff, it is way off topic.

Ltd company owners/directors can also get the NI credits for minimal NI payments, but then again they pay a lot of corp tax. It's all one big pot really.

Band7

oz0707 said:

Ltd company owners/directors can also get the NI credits for minimal NI payments, but then again they pay a lot of corp tax. It's all one big pot really.

It's actually not all one big pot. State pensions are generally paid from NI contributions only. There is a provision for a Treasury Grant from general taxation if there is a shortfall (as was last the case about 8 years ago) but the NI contributions are administered and accounted for separately from all other tax income.

RG2015

Band7 said:

oz0707 said:

Ltd company owners/directors can also get the NI credits for minimal NI payments, but then again they pay a lot of corp tax. It's all one big pot really.

It's actually not all one big pot. State pensions are generally paid from NI contributions only. There is a provision for a Treasury Grant from general taxation if there is a shortfall (as was last the case about 8 years ago) but the NI contributions are administered and accounted for separately from all other tax income.

I wasn't aware of that and have to say I find it surprising.

What else does NI contributions pay for, and are the annual calculations available anywhere?

housebuyer143

RG2015 said:

Band7 said:

oz0707 said:

Ltd company owners/directors can also get the NI credits for minimal NI payments, but then again they pay a lot of corp tax. It's all one big pot really.

It's actually not all one big pot. State pensions are generally paid from NI contributions only. There is a provision for a Treasury Grant from general taxation if there is a shortfall (as was last the case about 8 years ago) but the NI contributions are administered and accounted for separately from all other tax income.

I wasn't aware of that and have to say I find it surprising.

What else does NI contributions pay for, and are the annual calculations available anywhere?

Chat gpt states:

"According to the UK government, in the fiscal year 2019-2020, NI contributions raised a total of £146 billion. Of this amount, around £106 billion was spent on state pensions, while the remaining £40 billion was spent on other benefits and services, such as Jobseeker's Allowance, Employment and Support Allowance, and Maternity Allowance."